Virtual Leaders: Born or Made? By Mary Key, Ph.D. and Donna Dennis, Ph.D. Distance matters. An effective leader who has regular face-to-face contact with employees might not be as effective in cyberspace. Good conventional leadership skills are necessary but not sufficient to lead others at a distance. Therefore, it’s alarming how few organizations offer any special development for virtual leaders. Perhaps the assumption is that good leaders should just know how to transfer their skills to a virtual environment – as if they were “born” rather than “made.” For example, a Society for Human Resource Management study focused on the development of virtual leaders and reported that 80% of the respondents stated that special training was “not at all” a priority for virtual leaders. Over 60% of the respondents went on to say that their organizations provided no specific training for either the virtual team leader or virtual team members (Rosen, Furst, & Blackburn, 2006). A similar finding occurred in a large survey conducted by the Human Resources Institute (HRI), now the Institute for Corporate Productivity (i4cp), and commissioned by the American Management Association. It asked respondents to allocate 100 points to various characteristics that support strategy execution. The highest-ranked characteristic was “openness to change” and the lowest was “virtual management” (AMA/HRI, 2005). 1 So, the good news is that leading virtually is on the radar screen; the bad news is that it isn’t a priority. This could turn out to be major problem. Additional research conducted by i4cp clearly shows that the ability to foster innovation is one of the top characteristics of leaders, both today and, especially, in the future. Yet, there is mounting evidence that innovation and working stand virtually at odds with each other. A study on “virtual distance” and innovation as applied to virtual teams at 17 organizations indicates that virtual distance has a significant and negative relationship to innovation (Lojeski, Reilly, & Dominick, 2006). “Virtual distance” in this study was defined as both perceived and physical distance, highlighting the point that leading virtually is often a blend of virtual and face-to-face interactions. What seems to matter here is the perception of distance between leaders and those who are supposed to be following them. With so many organizations setting innovation as a goal for a competitive advantage, additional attention needs to be paid to how to enhance innovation virtually. One clear way is to minimize the perception of distance and take time to focus on stimulating and reinforcing innovation. Innovative practices generated virtually, need to be captured or they become lost knowledge. Unfortunately, organizations still don’t place a priority on knowledge retention and transfer. Experts have gone to great lengths to develop and articulate best-in-class strategies for organizations to follow. But 2 while knowledge retention is an acknowledged talent management strategy, it is not widely practiced in most organizations; in fact it seems to be more of an afterthought (DeLong, 2004; Liebowitz, 2007; Liebowitz, 2009). In a 2009 survey conducted by i4cp, only 21% of the respondents participating rated their organizations as retaining knowledge “pretty or very well.” Almost 80% (78.8%) of the respondents reported that they didn’t retain knowledge well or only moderately well. So with almost 80% of organizations setting themselves up for a significant drain of business wisdom, innovation will decrease. Interestingly, the remaining 20% in the i4cp study who stated that their organizations retain knowledge “pretty well” or “very well” showed a direct correlation with higher market performance (market share, profitability, revenue growth and customer satisfaction) (i4cp, 2008). Clearly, strong consideration needs to be given to capturing innovative processes and practices when they occur virtually and otherwise. If innovation is enhanced by reducing the perception of distance, then how do you accomplish that? What is different about leading virtually? Distance impacts a leader’s ability to collaborate, communicate, reach common goals, build community and connectedness, manage conflict and coach. Recent research (Siebdrat, Hoegel and Ernst, 2009) shows that dispersed teams can actually outperform groups that are collocated. To succeed, however, the authors conclude that virtual collaboration must be managed in specific ways. To get to higher levels of performance virtual leaders need to work harder at 3 relating to follower needs and aspirations in order to have the same level of positive impact that they would if collocated (Howell, Neufeld, and Avolio, 2005). Broken down to its simplest form virtual leaders need to be competent in three broad areas: technology, task and relationship. First consider technology, virtual leaders need to be able to use available technologies well. Technologies are, after all, a double-edged sword. Video conferences, online chats, instant messages, polling, email, the use of avatars, social media and other forms of communication can be powerful tools and can accelerate the development of rapport among strangers. However, integrating these forms of communication to enhance effectiveness isn’t easy, especially if you consider differences in communication styles, cultures and expertise among the virtual team members. Managing technology in a virtual environment is complex. Consider teams that are dispersed over more than three contiguous time zones, or team members whose native language is different from the majority of other team members, or team members who do not have equal access to electronic communication and collaboration technology. Virtual leaders not only use technology well, they also select appropriate technology for the team’s work. They do this while accommodating the 4 special needs of team members. Over reliance on email is common in today’s work environment, but can be particularly damaging in virtual work. Alternatives like instant messaging and wikis should also be integrated into the leader’s tool kit. Utilizing a shared space is often more efficient and avoids conflict from misunderstood email. Virtual leaders set standards for the use of technology on the team. The best leaders form agreements within the team for response time with email and voice mail. Virtual leaders set standards for knowledge sharing. Nearly every virtual team is focused on the problem of effective knowledge sharing. Each member of the team brings significant expertise in some areas but noticeably less knowledge in others. Many organizations have developed a role called chief knowledge officer (CKO) to pay attention to the processes and support systems that virtual teams rely on. The CKO can assess whether the team has the necessary resources and tools to ensure successful collaborative results in terms of communication tools. Knowledge sharing and knowledge management in general need to be part of the way an organization works as an ongoing set of processes and not viewed as a project. Building a culture that captures, retains and manages knowledge is critical to effective virtual leadership. The best virtual leaders are especially vigilant in task-related competencies. These competencies include setting up work coordination 5 processes, team agreements or norms, clarifying roles and responsibilities, setting goals, measuring milestones, and following up. Setting aside the time to lay a strong foundation for the team is time-consuming and yet pays off in the long run. Teams with a high level of task-related processes outperform teams with a low level. The more dispersed the team is the more important it is to excel in this competency. Teams with high dispersion find using formal team charters, rules of engagement, and group rooms where goals can be posted for all to see as useful tools that allow work to be done more easily. When work is ongoing and consistent, trust is built. Accountability also gives a sense of fairness in how standards are applied so trust can be accelerated because team members perceive that despite the distance, the playing rules are the same. In their study on collaboration and team behavior at 15 multinational companies, Gratton and Erickson (2007) found that diversity among virtual team members can initially be a deterrent to collaboration; the greater the number of strangers on the team from different backgrounds, the less likely team members will share knowledge or show other collaborative behavior. The researchers conclude that although teams that are “large, virtual, diverse and composed of highly educated specialists” are increasingly critical to complex projects, these same factors stand in the way of getting things done and being effective in getting along(p. 102). 6 In another study (Earley and Gibson, 2002) it was found that heterogeneous teams (teams comprising members from different cultures) do become more effective than their homogeneous counterparts. But there is a time lag of approximately 17 weeks due to a lack of shared understanding of communication strategies in the early stages. The amount of communication that is deemed to be appropriate within work contexts varies according to the cultural norms of each country. Cultures vary according to the amount of context that communicators have in each situation. Getting the right frequency and detail of communication is difficult. What is perceived as over-communication in some cultures can be perceived as under-communication